BP Jumps 4% On Dividend Increase, Despite Falling Profits
Fiona Cincotta February 4, 2020 12:12 PM
- Q4 earnings -26% to $2.6 billion vs $2.08 billion
- FY profits -21% $10 billion vs $12.7 billion 2018
- Dividend +2.4% to 10.50 cents per share
Falling energy prices
Higher production has failed to offset lower oil and gas prices. The average oil price across 2018 was $71 per barrel, whereas in 2019 this was down at $64 per barrel, an almost 10% difference – even with a 3% increase in production, there is no escaping that squeeze.
The results come following disappointing numbers from Shell, Exxon Mobil and Chevron as falling energy prices and reducing chemical industry margins hit the sector hard.
The price of oil has been under pressure already at the start of this year and could slip lower with the coronavirus outbreak potentially having a significant impact on demand for oil. Crude oil prices dived 15% across January and are already down 1.5% in February.
BP is in the process of a $10 billion divestment programme to end 2020. The programme aims to reconfigure BP's portfolio of assets in order to strengthen the balance sheet following the BHP shale assets deal. Q4 Divestment totalled $800 million, in addition to $600 million from sale of 49% stake in Australian retail property portfolio.
BP impressed by saying that it was ahead of target and plans an additional $5 billion by mid-2021.
Since the BHP deal BP’s debt levels have come increasingly under the spotlight, gearing has fallen from 32% in Q3 to 31% in Q4 and is expected to move to mid-20% in 2020. There had been concerns that the higher debt levels could dampen prospects of cash being returned to investors. However, this fear doesn’t appear to be materialising.
Bob Dudley Steps Down
These were the last results with Bob Dudley at the helm; he leaves after 10 years a chief executive. Bernard Looney, head of exploration and production will take over. The timing seems fitting as BP looks to steers its course towards for sustainable forms of energy in a rapidly changing landscape.
BP has jumped 4% higher in early trade on Tuesday. However BP continues trading below its 200, 100 on 50 sma on a bearish daily chart.
A break above resistance around 483-5p (29th Jan high, 50 sma) could negate the current bearish trend. Resistance is then at 500p (high 20th Jan) and 521p (5th Nov high).
Support can be seen at around 460p a level which provided support mid-December, before 452p, yesterday’s low.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.